Fed’s Stein Questioned on Pre-Crisis Policy

Federal Reserve governor Jeremy Steingave a speech Thursday in which he argued that in some circumstances the central bank should use monetary policy to head off financial instability that can arise from overheating credit markets.

It’s a notable departure from the Fed’s traditional view that regulation and supervision are the best way to address financial-market froth.

Among other things, Mr. Stein’s comments raise the question: Does he think the Fed should have raised interest rates to head off the 2008 financial crisis? An audience member at the St. Louis Fed bank symposium where Mr. Stein spoke asked that very question.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.